Issue estoppel and passing of accounts

By AdvocateDaily.com Staff

Executors or guardians passing accounts may be able to rely on the doctrine of issue estoppel — which precludes the relitigation of issues that have been conclusively determined in a prior proceeding — to prevent the process from getting out of hand, says Toronto estate litigator David M. Smith.

Smith, partner with Hull & Hull LLP, explains that applications for the passing of accounts can cause fresh problems for estate trustees or substitute decision-makers in contentious cases because courts typically order that they proceed separately from the main litigation.

"Where issue estoppel and abuse of process might become relevant is if a party to a guardianship dispute wants to participate in the passing of accounts and raise objections, consideration has to be given as to whether they are simply trying to relitigate the issues. Because it's a new proceeding, there's always a risk that someone who feels like they lost out in the will challenge or guardianship will use the passing of accounts as another way to air the same grievances," he tells AdvocateDaily.com.

When a passing of accounts is ordered in an estates or guardianship dispute, Smith says the right to participate — and to object to the accounts — differs depending on the type of action.

In an estate dispute, he says all the beneficiaries are granted the ability to scrutinize the estate trustee's passing of accounts.

"The issue is who has the right to participate in the passing of accounts," Smith says. "If it's a deceased's estate, the beneficiaries always have that right."

However, when the dispute arises in the context of guardianship over a living person, such as a fight between siblings over who should be appointed under a power of attorney for an incapable parent, Ontario's Substitute Decisions Act allows anyone to take part in the passing of accounts, with the leave of the court.

In either case, Smith says substitute decision-makers or trustees may be able to take advantage of the issue estoppel remedy to bar a proposed or objecting party, so long as they can show there is a risk of relitigation.

When deciding whether to prevent a person from participating, courts must assess whether the three-part test for issue estoppel set out in a landmark 2003 Supreme Court of Canada judgment has been met: